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Can We Really Delay Retirement?

A study released late last week by The Conference Board reveals that more and more Americans are apparently adopting a retirement planning strategy that could best be described as being lifted from a Beatles song: They are assuming their employers will indeed still need them and feed them when they’re are 64.

Retirement (Photo credit: Tax Credits)

According the Board, almost two-thirds of Americans between the ages of 45 and 60 are planning to delay their retirements past the traditional period of exiting the workforce in their early to mid sixties, likely as a result of the continuing impact of the weak economic environment on their finances.

On first look, this response appears to be good news. Getting Americans to retire later than in the recent past is something of a cause these days. You hear it everywhere from deficit busters in Washington to corporate honchos, who argue it is the best hope for the American economy. Delayed retirement is also a line increasingly parroted by the personal finance establishment, who know the vast majority of us have less than $100,000 saved in 401(k) and other retirement vehicles for our later years, and see it as our best hope for remaining financially solvent as we age.

So are hurrahs in order? Well, not so fast. As of right now, it’s unlikely that the jobs will exist for all of those seniors who want one. “I’m convinced that not everyone who wants to continue working will be able to do so,” admitted Gad Levanon, the study’s co-author.

We know that many of those who retire don’t retire because they have a sudden desire to get their gold watch. Life has a way of happening to people, and it happens in ways that defeat the best-laid plans. Those who lose their jobs in their mid to late fifties, for example, have a much harder time recovering their professional footing than those let go at younger ages, with a good chunk not obtaining another position for more than a year after losing their jobs. And if they do once again receive a paycheck, it’s quite unlikely that it will fully compensate them for their time away from the workforce: according to the Urban Institute, the typical fifty-something in that position ended up taking a position that paid 21 percent less than their previous job.

Moreover, we might well be living longer, but there is a paucity of evidence to show that we are living healthier – a problem for those who would want us to work longer than ever before. In fact, life expectancy is decreasing for men and women who did not graduate from high school.

Finally, many of those talking up the benefits of staying in the workforce into years previously thought best for perfecting one’s golf and bridge games, are not exactly stepping forward to explain how this is going to be accomplished in the United States‘ stagnant job market. Take The Business Roundtable, a group of CEOs, which recently announced their support of a plan to raise the age of Social Security and Medicare eligibility to 70. Among those leading the charge for the Business Roundtable on this strategy is AT&T CEO Randall L. Stephenson. AT&T, you should know, is thought to have cut 54,000 positions since 2007.

None of this is to say that the elderly should not work if they would like to. A healthy economy would indeed encourage workers who wish to remain in the paid workforce – whatever their reasons — to stay put. But a positive and proactive public response to our upcoming retirement crisis would also acknowledge that many who retire do so not by choice but by circumstance, and understand that to rely on the kindness of employers and the good health fairies to keep elderly Americans fiscally solvent is folly indeed.

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